Chancellor Jeremy Hunt has "picked the pockets" of the entire country with "stealth taxes" in his Autumn Statement, Labour has said.
Shadow Chancellor Rachel Reeves branded Mr Hunt's tax rises and spending curbs "an invoice for the economic carnage" created by Liz Truss's mini-budget.
The UK faces higher bills, rising unemployment and the biggest drop in living standards since records began.
But Mr Hunt insisted his plan would get the UK through an economic "storm".
The Office for Budget Responsibility's forecasts painted a bleak picture, with the UK economy predicted to shrink by 1.4% next year.
The chancellor blamed the economic downturn on "global headwinds" and Russian President Vladimir Putin's invasion of Ukraine, which have sent energy and food prices soaring.
The Autumn Statement is a crucial test of confidence in Prime Minister Rishi Sunak, whose ruling Conservative Party is lagging far behind Labour in the opinion polls.
In his statement, Mr Hunt undid much of the tax-cutting mini-budget unveiled by his predecessor as chancellor, Kwasi Kwarteng, only 55 days ago.
That was followed by days of market turbulence and ultimately the resignation of Ms Truss as prime minister after Conservative MPs revolted against her leadership.
Mr Hunt said while Mr Kwarteng was "correct" to prioritise growth in his mini-budget, "unfunded tax cuts are as risky as unfunded spending".
On public spending, Mr Hunt said government department budgets would face a squeeze because of inflation and pressure on public sector wages.
But while departments would need to "make efficiencies to deal with inflationary pressures in the next two years", overall spending in public services "will continue to rise, in real terms, for the next five years", he told MPs.
That means the Conservatives could be out of office by the time spending cuts come into effect, with the next general election expected in 2024.
The decision has been described as a "trap" for Labour, which will need to decide whether to accept the spending cuts, or say how they would cover the cost of reversing them, ahead of the next election.
Paul Johnson, director of the Institute for Fiscal Studies think tank, said the chancellor has "pencilled in some really tough spending periods after the next election - we wait to see whether those really happen".
The government has been keen to stress that Mr Hunt's statement does not amount to a return to the austerity policies of the Conservative-Liberal Democrat coalition government, in office between 2010 and 2015.
The balance of spending cuts to tax rises announced by Mr Hunt is more even than the 80% to 20% ratio under the coalition government.
Mr Sunak's government argues the measures are needed to fill a so-called fiscal black hole - the gap between what the government raises and spends.
But some economists have questioned the need for spending cuts and tax rises on this scale and say the decisions being made are political.
'Conservative double whammy'
The chancellor said income tax thresholds would be frozen until April 2028, which means millions of people will pay more tax.
"I have tried to be fair by following two broad principles: firstly, we ask those with more to contribute more; and secondly, we avoid the tax rises that most damage growth," he added.
But Ms Reeves said by freezing tax thresholds, the Conservatives "have picked the pockets of purses and wallets of the entire country".
"A Conservative double whammy that sees frozen tax thresholds and double-digit inflation erode the real value of people's wages," she said.
The Liberal Democrats described the Autumn Statement as a "cost-of-chaos budget", with everyone was "being forced to pay the price for this Conservative government's incompetence".
Alison Thewliss, the SNP's Treasury spokesperson, pointed to rising prices, saying households were finding it impossible to make ends meet.
She said insulation schemes should have happened long ago, adding: "It's not even jam tomorrow, it's huddle under a blanket until we get to you."
And former cabinet minister, Tory MP Jacob Rees-Mogg said the measures announced were based on unreliable economic forecasts, adding: "I'm particularly concerned about the tax rises, when an economy is going into recession. You have to be slightly easier in a fiscal sense, than you do when you're at the peak of a boom."
In other key measures announced by Mr Hunt:
* The state pensions triple lock will be kept, meaning pensioners will get a record £780 increase
* The household energy price cap has been extended for one year beyond April but made less generous, with typical bills capped at £3,000 a year instead of £2,500
* There will be additional cost-of-living payments for the "most vulnerable", with £900 for those on benefits, and £300 for pensioners
* The top 45% additional rate of income tax will be paid on earnings over £125,140, instead of £150,000
* UK minimum wage for people over 23 to increase from £9.50 to £10.42 an hour
* The windfall tax on oil and gas firms will increase from 25% to 35%, raising £55bn from this year until 2028
Watch: Rachel Reeves on 12 weeks of "Conservative chaos"
Watch: The chancellor opens his Autumn Statement with priorities of "stability, growth and public services"